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Australia swings back to modest trade surplus

An increase in iron ore shipments helped Australia return to a trade surplus.

AAP: BHP Billiton

Australia has recorded its first trade surplus since 2011, partly due to a fall in imports.

The Bureau of Statistics figures show the nation exported $307 million more in goods and services than it imported in March, seasonally adjusted.

The surplus was due to the combination of a modest 1 per cent gain in exports to $25.75 billion, while imports declined by 1 per cent to $25.44 billion.

The main factors contributing to export growth were an 8 per cent rise in cereal grain exports, 11 per cent gain in "other" mineral fuel revenue, and 2 per cent increase in metal ore and mineral sales.

Iron ore was a major driver of the increase in exports, with the quantity of shipments up around 20 per cent in March, after dipping during the cyclone season, and prices relatively stable.

However, while shipments of some key commodities were up, the import figures appear to confirm that the mining construction boom is beginning to cool down.

Imports of capital goods, such as heavy machinery, were down 11 per cent to $4.73 billion in March, indicating that businesses were spending less on expansion.

In contrast, imports of consumption goods remained relatively steady, with car imports continuing to rise along with leisure goods and food and beverages, although clothing and footwear imports dropped 9 per cent.

More to come

The trade figures came in ahead of economist expectations, which centred on an even balance between exports and imports, according to a survey by Reuters.

RBC economist Michael Turner says the March trade data provides a "taste of things to come", with export volumes for commodities such as iron ore rising and the value of imports falling as miners complete or cancel major expansion projects.

"The themes within today's trade data are likely to be repeated in coming months: an improving trade balance as the resource boom shifts from the investment phase (requiring higher capital imports) to the export phase," he wrote in a note on the data.

However, Westpac senior economist Andrew Hanlan is more pessimistic about Australia's trade outlook over the medium term.

"We see the risk that Europe remains in recession, that the pick-up that we've seen in the US peters out and that China - while it has improved somewhat - there's a lack of follow through," he told ABC News Online.

"So we're actually forecasting commodity prices to decline from the middle of this year, and that will tend to push the trade numbers back into deficit sometime during the second half of 2013."